Millennials and their Finances: The Struggle is Very Real

By Dylan Donley, Spring 2014 Graduate Research Assistant

financial struggleSince April is Financial Literacy Month, we are bringing you a number of blog posts that focus on none other than financial literacy. Today’s post will discuss a FINRA Investor Education Foundation study about the financial literacy and capability of millennials in contrast to other generations.

In March 2014, the FINRA Investor Education Foundation released a new study, The Financial Capability of Young Adults – A Generational View. In this study, FINRA came to some fairly startling conclusions about millennials and their basic financial literacy and capability (startling to me personally being a millennial). Overall, the study indicated that “millennials display low levels of financial literacy, engage in problematic financial behaviors and express concerns about their debt.” While some of these findings may not come as a complete surprise given the economic recession this country has experienced, the main issue for many millennials now in trying to cope with the effects of the Great Recession is dealing with and overcoming their lack of financial knowledge.

The study measured the financial literacy of millennials, gen Xers, baby boomers, and silent generationers by asking five questions covering fundamental concepts of economics and finance expressed in everyday life, such as calculating interest accrued in a savings account. Based on this test, the study concluded that only 24% of millennials could answer four or five questions correctly, in contrast to the gen Xers (38%), baby boomers (48%), and the silent generation (55%).

At the same time, the study also noted that the millennials were less likely to take advantage of financial education opportunities to increase their financial literacy: only 61% of millennials who were given the opportunity to participate in financial education actually did so, whereas 68% of gen Xers, 72% of baby boomers, and 73% of silent generationers participated in financial education programs when offered.

The study also focused on the debt concerns of millennials in contrast to other generations. According to the study, 46% of millennials are concerned about having too much debt (slightly less than gen Xers at 50%), whereas 38% of baby boomers and 23% of respondents from the “silent generation” are concerned about having too much debt. Relating to student debt specifically, 55% of millennials are concerned they may not be able to pay off their debt. This figure is on par with gen Xers and only slightly higher than the 50% figure for baby boomers. Across the board, student debt is a major concern for all generations.

However, 43% of millennials engaged in non-bank forms of borrowing that have high interest rates, such as pawn shop loans and pay day lenders, while only 21% of baby boomers and 8% of “silent generation” respondents used such forms of borrowing.

These statistics certainly indicate that millennials have a long way to go in terms of increasing their financial knowledge to effectively handle the many negative economic conditions that we are all faced with in today’s society. There are, however, a number of things millennials can do to jump start their financial literacy:

(1)   Take advantage of offered financial education programs

(2)   Utilize FINRA,, and NASAA financial education resources

(3)   Take the FINRA Financial Literacy Quiz to see how you stack up against the average millennial.